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  • Writer's pictureAman Rajabali

Employee Engagement: The Key to boosting Return on Investment (ROI) on Human Capital

There is an irrefutable law in the field of human resources, which states that engaged employees are more productive and are capable of generating higher Return on Investment (ROI). Employee engagement cannot be quantified by most accounts and it is nearly impossible to measure any real return on investment. This can be a productivity differentiator or end up at the bottom of the heap in an organisation’s priority list!

People are the most valuable resource for any organisation. They usher change, ensure long-term growth and lack of quality talent can bring down an organisation in no time. Employee engagement is an investment in your people.

ROI in employee engagement can be calculated on 4 major parameters:

  1. Speed of Onboarding A well-defined and structured onboarding process is super critical for any organization to improve productivity of the employees. An optimized onboarding process enables companies to make their employees start adding value to their organization faster. It usually takes more than 90 days for any employee to begin adding value to the employer (Michael Watkins, The First 90 Days). Hence, a poorly managed onboarding process adds further to the cost of the company.

  2. Absenteeism A report by Gallup highlights the fact that companies with high employee engagement are likely to see 37% lower rate of absenteeism. Absenteeism hampers productivity, disrupts team equilibrium and become a potential breeding ground for future conflicts to increase attrition rates, besides adversely impact the bottom-line of firms. The degree of absenteeism is strongly correlated with an employee’s willingness to scale that extra mile to act in interest in the company.

  3. Employee Productivity This is the holy grail to measure the success of any firm and its work culture if it accounts for sustainable employee engagement. It has now been scientifically proven that happy people are more likely to be productive and do not require external intervention to manage work and timelines. Thankfully, there are numerous ways to spread happiness at workplace and boost employee engagement.

  4. Employee Turnover The negative correlation between employee engagement and turnover is as high as 43% and goes to prove that of engagement levels improve then, employee turnover automatically goes down and creates a more suitable work culture that fosters trust, camaraderie and willingness to acquire more skills to add value to the business and act in its best interests.

Offering good perks such as flexible work schedules, unlimited vacations and remote work implies trust and not just free lunch or beer parties. It is an indicator that as a company you are willing to trust and respect them. Employees return the trust in form of harder work and better output. So offering good perks ultimately return in form of increased revenue and decreased costs.

More than 66% of engaged employees reported that they had no plans to switch jobs. Employee engagement directly impacts the topline of any company. In absence of happy employees, the customers would not be treated well, and in absence of good service the company loses any scope of repeat business from the customers. Engaged employees also have a clear career path charted out for them which enables them to contribute successfully.

An engaged workplace also values clear and transparent employee feedback loop to ensure that concerns are highlighted and solutions are worked to address them. In this manner, delivery of work becomes more effective and efficient.

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